Guidewire Software (GWRE) Reports Solid 1Q Earnings; UBS Raises Price Target to $70

UBS reiterated a Buy rating on Guidewire (NYSE: GWRE), and raised the price target to $70.00 (from $68.00), following the company's 1Q earnings report. GWRE reported revenues of $82.3M, beating the Street's $81.3M estimate. EPS of $0.07 came in above Street estimates of $0.03. GWRE's focus on reducing total cost of ownership is paying off, as 7 out of 12 golives this quarter came in under one year's time. Management raised revenue guidance for the FY by $1M at the mid-point as a result of raising its License revenue outlook from $202-212M to $204-212M.

Analyst Brent Thill commented, "GWRE saw upside in revenues ($82.3M vs Street $81.3M), operating margin (8% vs. Street 4%), as well as EPS ($0.07 vs. Street $0.03), while also raising its FY16 outlook. The company brought in its 6th Tier 1 customer win in two Q's – MS&AD Group, a top three carrier in Japan, showing that its P&C insurance software is still seeing momentum at the top of the market. MS&AD Group licensed ClaimCenter, adding it to the list of large carriers that GWRE has promising expansion opportunities with (less than ~5% penetrated with the 5 Tier 1 accounts added in Q4). Additionally, GWRE noted that it saw its first interest from a customer in deploying GWRE in a public cloud environment. We are encouraged to see GWRE making progress in its hosted offerings because they offer favourable economics and should help it unlock larger Tier 2-4 part of the market (~55% of total DWP comes from these smaller insurance carriers). We view GWRE as a core SMid-Cap holding and see its consistent history of share gains continuing given its increasing number of referenceable accounts."

For an analyst ratings summary and ratings history on Guidewire click here. For more ratings news on Guidewire click here.

Shares of Guidewire closed at $60.55 yesterday.

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